Matthew Attwater describes going from employee of the year to medically retired

ABC News

Beyond Blue chairman Jeff Kennett has lashed out at the Commonwealth Bank over the treatment of one of its employees, who was dismissed after suffering a severe mental breakdown, but left to wait years for an insurance payout.

Key points:

Bank's insurance arm used same psychiatrist's report to show employee was capable of returning to work

ASIC now investigating CommInsure's practices

The bank is facing fresh allegations of unethical and unscrupulous behaviour in its life insurance business, CommInsure, as it tries to rebuild its reputation after a damaging scandal in its financial planning division.

Mr Kennett said the bank had "a great deal to answer for" over the treatment of employees like Matthew Attwater, 32, who was "ill-health retired" after suffering from major depression, following a brutal domestic violence incident.

Mr Kennett described the bank's actions as disgraceful and said there was no excuse for its behaviour.

"For the Commonwealth Bank … to be doing this sort of thing to one of their own employees is disgraceful. Why do they get away with it? Because they're big," he said.

The bank relied on a psychiatrist's report to terminate his employment, which found Mr Attwater was not able to function in the bank or the general workforce "at any foreseeable time in the future or in any ongoing manner".

But when he made an insurance claim, CommInsure relied upon the same report to find he was capable of returning to work.

"How can one department say 'no sorry you're so disabled that you can no longer work for us and that you'll never ever be able to work in any industry' and then an insurance assessor looks at that and says 'well no not really, you can, there's more things that you can do'," Mr Attwater said.

It took two-and-a-half years to assess Mr Attwater's claim, during which time he was forced to sleep in his car.

Commonwealth Bank 'tramples over individual rights of citizens'

Mr Attwater's case was finally settled last month, soon after he was interviewed by Four Corners.

His lawyer, Will Barsby, said his case should have been straightforward.

"Matthew's case is one where simply lawyers shouldn't have had to be involved. It's a straightforward case where Matthew suffered a very severe injury," he said.

Mr Kennett said there was no excuse for the behaviour and that insurance companies should not be solely motivated by greed.

"Please remember these companies are taking premiums every year and then they deny a person that claims," Mr Kennett said.

"They don't offer to pay the premiums back but they will invariably, as seems to be the case here, delay the process, they weaken the individual so these cashed up organisations literally trample over the individual rights of so many citizens."

When asked about Mr Attwater's case, Commonwealth Bank chief executive Ian Narev said his company had "a long way to go" to better help employees suffering from mental health issues.

"I accept that we, like many big businesses, have got much more work to do to bring our understanding of mental illness up to the level it ought to be at," he said.